CEO Talk | Renzo Rosso, Chairman, Only The Brave

Today, Nicola Formichetti was revealed as the first-ever Artistic Director of Diesel. A few weeks earlier, BoF’s Imran Amed conducted his latest CEO Talk with the man who started it all, Italian fashion entrepreneur Renzo Rosso.

Renzo Rosso | Photo: Steve McCurry

PARIS, France — It would be pretty easy to dismiss Renzo Rosso as just another jet-set executive, simply on the basis of his glamorous lifestyle. On the day I met with him in Paris at his ‘home-away-from-home,’ a suite in the ultra-luxe Hôtel de Crillon with a huge balcony overlooking the Jardins des Tuileries, Rosso’s private jet had been held up in Italy due to customs complications.

‘First-world problems,’ as they say.

But with a shaggy mane of curly hair, statement jewellery and scores of tattoos — ‘RR’ for Renzo Rosso on his fingers, four iconic Margiela-style stitches on his back, and his personal motto, ‘Only The Brave,’ inked on his ankle — it’s pretty clear that this is no ordinary billionaire. Indeed, beneath the outsized personality and flamboyant style is an astute businessman, who seems to be driven more by instinct than carefully laid strategies.

Whatever his approach, it seems to be working. Mr Rosso has been organically building a group of companies under the Only The Brave (OTB) umbrella, which now has more than €1.5 billion in revenues and includes brands as diverse as Diesel, Maison Martin Margiela, Viktor & Rolf and Marni, the avant-garde Italian fashion brand in which OTB announced a majority stake late last year. Staff International, a manufacturing and distribution company, is also part of OTB, and works with a slew of brands both inside and outside the group.

It all started in the late 1970s, when Mr Rosso co-founded Diesel with denim legend Adriano Goldschmied at the age of 20. In 1985, Rosso took control of the Diesel brand himself and over the next decade developed it into one of the coolest fashion companies on the planet. Known for their distressed washes, sexy cuts and the provocative ad campaigns that promoted them, by the late 1990s, it seemed that everyone wanted a pair of designer Diesel jeans.

But by the mid-2000s, the Diesel brand had somewhat faded. Edgier upstarts like Acne and Nudie from Sweden, and Seven and Citizens of Humanity from Los Angeles, had come to the fore, tredding on Diesel’s turf with more minimalist finishes and skinny fits.

It’s an assertion that Mr Rosso disputes. During our interview, he enthusiastically jumped out of his chair to show me the slim cut of his sleek, overdyed black jeans, underlining that Diesel denim remains as relevant and as on-trend as ever. It’s just a communication problem, he said. That’s why Diesel has lost its cool.

Enter Nicola Formichetti, who, today, was named Diesel’s first-ever artistic director. Rosso and Formichetti seem like a match made in fashion heaven. Mr Formichetti has built a reputation as a fluent digital communicator, with a crazy fashion personality of his own. He is known as much for his runway antics with Lady Gaga and his non-stop tweeting and instagramming, as he is for the creative ideas he brought to the relaunch of ready-to-wear at the fragrance-dominated Mugler brand, owned by the Clarins Fragrance Group.

Speaking to BoF on the eve of the big announcement, Formichetti said he was looking forward to the commercial challenge of bringing new energy to the Diesel brand.“I saw this one kid in Berlin wearing my Mugler shoes and I just about flipped out. It’s an amazing feeling that brings such joy,” he said over the phone from New York, adding that ready-to-wear was never really a priority for Mugler, a growing source of frustration for him. “When I was talking to Renzo, I was intrigued by the idea of influencing the street, spreading ideas in an analogue way.”

At Diesel, Mr Formichetti can bring his skills to a brand with a real commercial platform, including more than 400 directly-operated stores around the world. The young superstylist has been tasked with reviving the fearless communications strategies which brought Diesel into the global consciousness in the first place.

The first step is a video announcement, released exclusively to BoF, in which Rosso and Formichetti speak about their new partnership against a meld of pre-digital and post-digital imagery that tie their personal brands and aesthetics together. The video will be delivered on iPad minis to fashion influencers around the world today and first shared with the wider world here on BoF. It’s quintessential Formichetti and a thoroughly modern way of making a big announcement like this.

But the Diesel reboot is only one aspect of Mr Rosso’s vision for OTB. His stated goal is to create a “modern” luxury group that can carry its own weight alongside the big guns in France. Over lunch in his sprawling hotel suite in Paris, Mr Rosso and I discussed the future of OTB, the strategies for each of his brands and the new role he will be playing as he transitions from rebellious entrepreneur to elder statesman of the group he has built, brand by brand, store by store, over the last 30 years.

BoF: You use the word ‘modern’ when describing your group. What do you mean exactly?

RR: The way that we have done our clothes [from] the very beginning was in a modern way. The way that we work inside our company is modern, because we interact with everybody. It’s a team of people working together. I am just one [person] in a bigger team. I am always saying to them, it doesn’t matter which label you are [working in]. Maybe you are a receptionist or a manager. Always try to see how things can be. This for me is a motto.

When I was starting, for example, we were the first fashion company that started to bring in managers from [companies like] Procter & Gamble and Unilever. This was the end of the 1980s and that was totally new for the fashion industry.

BoF: If you take the French luxury goods groups as an example, one of the reasons that these groups exist, at least in theory, is that there are some synergies between the businesses. As you think about the specific business reasons for bringing brands together, in a group like this, what are the benefits?

RR: There are many benefits. First, ‘Made in Italy.’ We have an incredible expertise of total know-how in production today. We have a know-how for treatment, knitwear, bustiers, hand-made embroidery, making denim. Also we can produce in Italy, but also large quantities in China or Bangladesh. We have a know-how for shoes and for bags.

Also, the bigger we become, the [more] new malls we deal with, in Dubai, in Japan. It is important to have the right location [in malls]. If you have a series of important brands, you have a priority compared to other brands.

In logistics, it’s also fantastic, [for all] of the shared services basically; financial, IT, logistics, all of those are conglomerated into one organisation and of course they are more effective. When you go to buy space in the media, you also have benefits. You’ll also be more attractive for people [who] come to work for you because you are a group.

BoF: But while you have these shared synergies, each of your brands has a very distinctive business model and distinctive positioning. Lets start with Diesel, the jewel in the crown and where it all began. Is bringing Nicola in an effort to re-energise the brand somehow? Diesel seems to have lost its edge somehow, over the past few years.

RR: If you put our product on the desk [with] 10 different brands of denim, you’ll see that we are still incredible. I can describe at least ten to twenty little details why our product is very qualified, from the way we stitch to the trims. So, I am not afraid about what we have in terms of product, but it’s true we [have lost] a little bit in terms of coolness because we are not communicating like we were before.

I think [what] we are missing is an artistic director to bring the crazy, funny ideas like we did before. Finding someone who can understand Diesel is very difficult. Diesel is complex, complicated and unique. Our customers are expecting something very different. They don’t want to see traditional things.

I’ve followed Nicola Formichetti around the world. He has an incredible following, and made such a difference at Mugler from the very first show. I was incredibly impressed with the pop-up store he did in New York. I spent almost three hours inside that store! The way he arranged the clothes and the energy he brought to the space, it was great.

Diesel has never had a single creative director before, but now as I spend more time managing the group, I need to put the right people in the right job. And Nicola is the right man for this job.

BoF: I spoke to Nicola and he says he really wants to use digital in his strategy to reboot this brand.

Yes, we want to move a lot on the digital side. It is the modern way to communicate. I follow him on Twitter and Instagram, and the way he communicates is modern. It reminds me of how I was when I was young, just starting out at Diesel. We have the same way of thinking. He is always looking for something strange. Who can you find in the fashion industry that is as crazy me? Nicola.

BoF: I also want to talk about the other brands in OTB Group. People might not have called Margiela a brand a few years ago because it was more like a secretive cult. And some people say this expansion that you’ve gone through for Margiela has come at the expense of the original spirit of the house. The cult aspect and the die hard followers of Margiela, they now see Margiela stores on the street, labels, a fragrance…

RR: Margiela is still a cool brand and a group of people are working behind [the scenes] without a face. It was not a commercial fragrance, it was a very sophisticated fragrance. The home concept is also very sophisticated. For me, Margiela is the brand within OTB that is the most credible and powerful in lifestyle.

BoF: But where do you see the brand going now?

RR: The same as now. We need more stores around the world, because the world is very big place. Right now, there are around 27 stores  Marni already has 100 stores  so we have the ability to expand. It’s still a niche… we have to grow, this is how to survive. If you don’t grow you won’t survive. Today, if you are running a business, you have to grow.

BoF: Let’s talk about Viktor & Rolf. If I’m honest, I find this brand a little bit confusing. It’s a completely different model. When you see Diesel, it’s a broader lifestyle business, contemporary positioning, price points are good, multiple sub-brands, then you see Margiela which is conceptual. But Viktor & Rolf is different. From the vantage point of an outsider observer, this seems to be a business that’s all about fragrances.

RR: It is.

BoF: Does it work as a business that way?

RR: It’s not an easy business. I was in love with them from the beginning. I followed them for about two years. They had crazy couture in [their] minds and their thinking as a brand [was] that I can do the ready-to-wear. If they do these crazy things, how easy is it to go down [market]? It was not, and I failed. This is why now we try to go the opposite way and try to do something just high-end and the rest, perfume, shoes, bags, and much less ready-to-wear.

BoF: There are other brands in the market that are a little like that, where the actual clothing is really difficult  like Jean-Paul Gaultier  but the fragrance is huge. I’ve heard that FlowerBomb is one of the world’s best selling fragrances.

RR: FlowerBomb is number four worldwide. It makes a lot of money, about €100 million [at] wholesale. Yes, the ready-to-wear is really very small, but we are very close to closing a deal to open a store for Viktor and Rolf. It’s the only brand where it’s true we are [still] a work in progress. In terms of [their] name, they have a possibility to become important too.

BoF: Viktor & Rolf is technically a licensed business via the Staff international business unit, as is Margiela, Dsquared2, Just Cavalli, Marc Jacobs for Men and Vivienne Westwood Red Label. What does Staff International do?

RR: At Staff international, they know how to develop a product, but they work in separate ‘boxes.’ I keep the brands totally separate. DSquared2 lives in Milan. Margiela lives in Paris. Viktor & Rolf lives in Amsterdam, and they have the whole house there: the designer, the marketing, the lifestyle is there. I want to keep them totally independent. I bring the stuff for their incredible know-how and expertise, how to make synergy.

BoF: And what about Marni…your most recent addition?

RR: They were in a situation [where] they needed a partner. I was thinking it would be nice that Marni would join our group. Marni was an opportunity at the end that came along, it was not something that came out of research. They are fresh and modern. It’s very different [from] Margiela, [which] must be soft and discrete, with a possibility to become a very important and sizeable company.

BoF: I also hear there are many other Italian brands that are now for sale. In a way, the difficult economic situation has been advantageous to you because it’s given you opportunities to seize… Just Cavalli had problems because Ittierre went bankrupt. Valentino had problems under Permira. Marni had capital issues, which constrained growth. There are so many undercapitalised, unprofessional luxury brands in Italy that are run by families. It seems to me there’s a big opportunity now for people who have got a track record, the right infrastructure, the right set up. If you keep buying, there’s no reason why this could not lead to something of this scale of Kering (PPR) or LVMH.

RR: That’s a nice dream! Just last week I [had] an incredible, beautiful offer. But if we buy something we have to work and develop it, otherwise it doesn’t make any sense. I spoke with one very big private equity company, a week ago, and they told me that the best place for them to invest was Italy, because for the same reasons you say now. Italians don’t like acquisitions. I love the French, they are all together in the same basket.

This interview has been edited and condensed.